Yasmine Acebo makes her living by hooking up renters with deals on Austin apartments. In recent months, they haven’t been hard to find.

In the midst of a pandemic-era population surge, rents jumped a staggering 25% in 2021 in the Texas capital for one of the biggest increases in the nation. But a development boom and new policies encouraging housing density have sent vacancy rates soaring. Now, landlords are struggling to fill gleaming new developments and offering major discounts to lure newly empowered renters.

“Nearly all apartments in Austin are doing some sort of specials for move-ins,” said Acebo, an agent with Pauly Presley Realty. One recent example: a client was searching for a one-bedroom apartment in South Austin and settled on a unit at Perch Apartments about 20 minutes from downtown. It normally would have cost $1,420 per month, but in return for applying the day after her visit and leasing at least 13 months, she received two months free rent, a waived administration fee and a $600 credit.

“It was inevitable once you noticed how many apartments were going up,” Acebo said.

As the U.S. confronts a housing crisis so severe that it became a wedge issue in the presidential election, helped fuel some of the fastest inflation in decades and made it all-but-impossible to recruit teachers, fire fighters and restaurant workers to high-cost areas, the Texas capital has become the poster child for advocates who say the only way out is by building more homes. And while other cities run by progressives including San Francisco and Chicago face criticism for onerous permitting processes, Austin has cut regulations to speed up development. It appears to have worked.

Nowhere in the country have rents declined as much as they have in Austin — now 22% off the peak reached in August 2023, according to Redfin. The median asking rent is $1,399 per month, down $400 in less than three years.

Once the “slacker” capital of the country, Austin’s reputation as a low-cost city had already been waning when it was completely upended during the pandemic. But now, as rents nosedive, the picture has changed yet again, so much so that the capital city is no longer the priciest place to rent within Texas. The drop has sparked fresh debate between Yimbys, shorthand for pro-development, “Yes-in-my-backyard” advocates, and Nimbys, the pejorative name for those who resist change.

“This is really Economics 101; it’s supply and demand,” said Cindi Reed, the director of sales at MRI Apartment Data.

In 2021 — which Reed calls “the year of extreme” — developers poured into Austin as pandemic-era corporate relocations surged and remote workers flocked to the city seeking lower taxes, sunny weather, a plethora of tech startups and a robust social scene. Builders typically take two years to go from buying land to welcoming tenants, and as their cranes climbed into the sky, the new arrivals crammed in to the existing apartment stock.

The rental occupancy rate reached 91.7%, the highest level since 2015. Housing became the dominant issue of the city’s mayoral race as businesses worried pricey apartments might complicate the city’s cost-friendly image.

“There is no question that we are in a cost-of-living emergency in this town,” Kirk Watson said during his successful campaign for mayor in 2022.

Then came the flood of new apartments. Developers dumped almost 50,000 rental units on the city in 2023 and 2024, according to Fannie Mae data. That represented a 14% increase in the supply, the biggest on a percentage basis for any major U.S. metro area.

“The rental market here is saturated with availability,” said Jody Lockshin, a veteran Austin broker and the owner of Habitat Hunters. Landlords have almost no leverage, and she has seen buildings offer three months free to new tenants and rate reductions to keep ones already in place.

Developers Tishman Speyer and Ryan Cos. are offering as long as eight weeks free rent at ATX Tower, a high-end residential and office development in the heart of downtown. With about 370 units, the building features some of the most elaborate amenities in the city, including an indoor cinema, a co-working lounge and a 20th-floor pool overlooking Republic Square Park. Prices start at $2,352 for a studio and climb to almost $8,000 for a three-bedroom.

RPM Living, a management and development firm, is offering four to six weeks free at its high-end rentals, including The Bowie and The St. Mary, where residents can get a tan by poolside cabanas.

Managers at some of the country’s biggest real estate investment trusts expect it will be a while before Austin landlords regain power.

“The supply picture is really tough and there may be a year or so of delay before we kind of reengage in that market,” Mark Parrell, the chief executive officer of Equity Residential, one of the country’s largest apartment REITs, said in a recent earnings call.

Camden Property Trust assigns letter grades to each of its markets at the start of the year based on their expected performance. Last in its class: Austin, with a C-minus. The firm expects to see rent growth pick back up eventually, but says the supply glut needs to work itself out first.

Building at speed

The last attempt at significant building code reform, called CodeNEXT, burned $8.5 million and five years on a rewrite that went nowhere before the city council spiked it in 2018. But as it became harder to find an affordable place to live, a new political consensus emerged in Austin.

“After years of inaction, everyone felt the urgency of the moment,” said Zo Qadri, a Democrat who was elected to the city council in 2022. “Housing was the No. 1 issue. It was the lack of affordability.”

That year, Watson, who had led the city as mayor during the dot-com boom, returned to the job. He focused on slashing delays in the permitting process, and the city scaled back rules that limited the height of buildings within 540 feet (165 meters) of single-family homes. Austin also became the largest city in the U.S. to end parking mandates.

More recently, Austin has focused on boosting the supply of single-family homes by allowing developers to build as many as three units on lots that were previously restricted to one home and slashing the minimum lot size to 1,800 square feet from 5,750. The city has received about 350 applications for homes under those two programs.

“Everyone in the building and development community was surprised by the change in winds from a housing perspective,” said Cody Carr, a homebuilder who has completed two projects that take advantage of the three-units-per-lot change and is working on four more.

Home prices have also dropped from pandemic heights, down 23% since May 2022 as interest rates climbed, but like apartment rents remain well above pre-pandemic levels. The median sale price last month was $515,000, up about 34% from the median of $383,380 buyers paid in January 2020, according to Redfin.

The push for greater affordability has also made for strange bedfellows as conservatives in the state legislature — which is dominated by the far right — embrace some of Austin’s moves with similar policies at the state level.

One bill signed into law last session opened a pathway for developers facing long permit delays to get approval from officials in other municipalities or any licensed engineer. This session, Lieutenant Governor Dan Patrick, who leads the state Senate, declared affordable housing one of his top priorities. Already, a raft of bills have been introduced to promote accessory dwelling units, reduce minimum lot sizes and slash parking minimums.

“I think that the lege does a lot of horrible stuff,” Qadri said, citing state lawmakers’ efforts to block cities from enacting more liberal legislation in areas like labor and finance. “But there are at times, at least as it relates to housing, these glimmers of hope and good work that can be done.”

©2025 Bloomberg L.P. Visit bloomberg.com. Distributed by Tribune Content Agency, LLC.